At the weekend, Ethiopia’s Foreign Minister Seyoum Mesfin questioned the validity of the 21 March announcement in which the Eritrea-Ethiopia Boundary Commission (EEBC) stated categorically that the village of Badme was in Eritrea. He urged the EEBC to reconsider.

The symbolic village of Badme was the flashpoint of the 1998-2000 border war between the two countries.

It also emerged that a key meeting in Nairobi last week between religious leaders of Ethiopia and Eritrea to boost the peace process was cancelled at the last minute.

Ronnas told IRIN that the EEBC announcement had not influenced Sweden's decision to add a peace clause – rather he was highlighting that the Horn has been ravaged by wars.

The money – the vast majority of which will go directly to the Ethiopian government – will primarily be used for democracy and human rights, and gender development.

“We have made one clear reservation as we now announce a very considerable expansion, and that reservation is that would Ethiopia move towards war again, would Ethiopia become involved in armed conflict, we would have to re-visit our proposal,” he said.

“It is very difficult for any government to justify putting money into state budgets which would necessarily have to use a large portion of its resources for this.”

His comments have been echoed by other western diplomats in Addis Ababa. “The message we are trying to get across is that there is a price of going to war and that price is foreign aid,” one senior European official told IRIN.